Monsanto Strikes Deal to Develop Plant Microbes

By Jacob Bunge

Monsanto Co. is teaming up with a Danish biotech company to develop microscopic organisms that help plants grow and resist pests, a move that could enable the U.S. agribusiness giant to circumvent some concerns over its genetically modified seeds.

The world’s largest seed company agreed to pay Novozymes A/S $300 million as part of the deal, in which the companies plan to combine their efforts to cultivate helpful microorganisms, such as tiny fungi and bacteria. Monsanto will get the use of some Novozymes products and take on some of the Danish company’s staff to help with marketing.

Monsanto’s core business is selling seeds for crops like corn, soybeans and cotton that are genetically modified to be heartier and better fend off destructive insects.

Critics such as environmentalists have raised fears over possible long-term health problems from GMOs, and several European countries, for example, restrict genetically modified crop cultivation. Industry officials say no such problems have been demonstrated, and the companies say the products are safe.

But companies also are working on ways to help farmers increase their yields that don’t involve GMOs. Monsanto, which has been developing such microbes on its own for nearly two years, thinks one advantage of such “non-GMO” products is that they don’t require the same lengthy regulatory approval process as GMO seeds, said Dr. Robert Fraley, Monsanto’s chief technology officer.

About $2.3 billion of microbe products for agriculture were sold world-wide last year, and sales are expected to grow at roughly 14% to 16% a year, according to estimates from Monsanto, which reported $14.9 billion in overall sales for its fiscal year ended Aug. 31.

About 50 billion microbes live in a typical tablespoon of soil. Agricultural researchers are trying to better understand how those organisms interact with plant roots, to raise plants that can absorb nutrients faster and resist destructive diseases.

Novozymes’ main specialty is producing industrial enzymes—complex proteins that help create chemical changes.

Under the new agreement, it and Monsanto will maintain separate research efforts, while Novozymes handles manufacturing and Monsanto sells new products. The companies will split the cost of development equally and each will get 50% of the profits from sales. The deal requires approval by some competition authorities.

“This collaboration immediately elevates microbials as the next major platform in agriculture that will elevate yield and productivity beyond the seed itself,” said Hugh Grant, chief executive of Monsanto, speaking to analysts on a conference call on Tuesday.

Mary Ann Bruns, associate professor of soil science at Penn State University, called the effort “a different spin on an old idea.” Soybeans, for example, have long been inoculated with bacteria that help the roots develop lusher plants, she said.

Ms. Bruns said the idea of using microbes for plants hasn’t caught on yet in part because many of the largest farmers are used to growing crops with synthetic fertilizer. Another challenge, she said, will be ensuring that the microbes are able to retain their effectiveness in storage.